Tag: Paul Krugman

An Affordable Health Care System

Post author By David
Post date July 8, 2009
7 Comments on An Affordable Health Care System

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On Sunday, July 5, Paul Krugamn laid out his argument that affordable health care for everyone was an achievable goal.[quote] Many people would be surprised to learn that I agree with him on that. He correctly argues that we already cover the bulk of the most expensive health care patients by covering the elderly under Medicare. He also argues that the uninsured already receive much care that we are already paying for so we are already paying much of the costs for their care. Finally he argues (as a corollary to the first point) that many of the uninsured are generally young and healthy so that insuring them would cost less per person than our current per-person cost of public insurance (bringing down the average cost per person and increasing the overall cost only slightly).

His conclusion is that “extending coverage to most or all of the 45 million people in America without health insurance — should, in the end, add only a few percent to our overall national health bill.” He would be right at the beginning but eventually the nightmare spiral of skyrocketing costs would take over because the fundamental problem in our health care system would not be addressed – overuse and the disconnect between the source of payment and the subject of care.

Tags Elevated, government, health care, money, New York Times, Paul Krugman

National

The Paradox of Government

Today I read Paul Krugman writing about t he paradox of thrift. As is often the case, I found it interesting to read and to notice the assumptions that Krugman bases his positions on. While anyone can go read what he wrote I’ll give a quick overview of the paradox of thrift – increases in personal savings can have an adverse effect on the economy causing a net decrease in actual savings overall.

The first assumption made by Krugman is that savings come in the form of currency with an assigned value but with no real intrinsic value – paper money. If savings come in the form of debt reduction or in acquiring real goods for future use then a bad economy increases the value of the savings rather than decreasing that value.

The second assumption made by Krugman is that government should be a significant force and substantial contributor to the economy. This is a man who argued that the government was doing the wrong thing and not enough of it when Obama got his stimulus bill passed (ARRA). While I often disagree with his assumptions I absolutely trust Krugman to be able to read the numbers and do his math so I won’t attempt to do my own numbers. I will link to the source of his numbers and then play with his graph to show how things look under new assumptions.

Tags economics, Elevated, government, national debt, Paul Krugman, reactions, savings

General

Economic Contradiction

Paul Krugman and I agree on little politically (I have at times agreed with him when he was arguing that TARP was a bad idea – although we disagreed on the reasons why) and despite the fact that my assumptions about the nature of sound economics differ from his most of the time I recognize that he has a lot of expertise in the field that I can learn from. For example, I have not known enough about economics to be aware of the Setser point that he is looking at. For those like me who are new to the term, the idea is this:

high government borrowing is more than offset by net negative borrowing from the private sector

As far as I can tell, Krugman is among those who believe that the flow of money defines the health of the economy – the more the money moves (borrowing, spending, and creating) the healthier the economy. Krugman and those who believe like him will doubtless argue that when the private sector borrowing declines governments must borrow more to keep the economy healthy. In other words, lower private sector borrowing causes (or rather necessitates) higher government borrowing. Unfortunately for them the numbers appear to paint a different story. If the cause and effect relationship is not simply the reverse of that assertion then the relationship is at least symbiotic with governments trying to manage or compensate for the actions of the private sector causing an opposite, but more than equal, reaction as the private sector tries to outguess the government.

On the other hand, I believe that people in the aggregate (meaning many individuals over a sustained period of time) make economically beneficial decisions (not always the best decisions necessarily, but better than rolling government loaded dice).

What the Setser point tells me is that government borrowing drags the economy down because of the opposite but more than equal principle noted by Sester and Krugman and it prolongs the agony when those in the private sector – for whatever reason – determine that we need to slow the borrowing to set the economy back on a fundamentally sound foundation.

Tags economics, free markets, government, money, New York Times, Paul Krugman